Frank Kendall, undersecretary of defense for acquisition, technology and logistics, spoke to an audience at the American Institute of Aeronautics and Astronautics SciTech conference about force structure and readiness challenges the Pentagon faces under a cloud of fiscal uncertainty.

“I can’t say much about … the budget we’re going to submit, because we haven’t submitted it yet,” he said. “But we’re obviously working on it and getting ready to do that in the next few weeks. Hopefully, by next week we’ll be out of the continuing resolution world and into the world of executing an actual budget. We got some relief, of course, from sequestration.”

Kendall said this year the department will be “pretty close” to splitting the difference between sequestration numbers and what President Barack Obama requested.

“This year we did not start spending as if we were going to get our request,” he added. “We were spending with an eye on expectations that sequestration might continue. So we’re in much better shape than we were in last year. But there are still some substantial cuts in there, and they fall disproportionately, I’m sure, to parts of the budget.”

The acquisitions chief said if the fiscal year 2015 bipartisan budget act governs what happens next year -- “and right now the indications are that it probably will,” he told the audience -- the department will be “quite a bit closer” to sequestration levels.

“We’ll be down to [a cut] within about $10 billion for defense at the sequestration level,” Kendall said. “It was a $50 billion cut, so we’re looking at 80 percent of that.”

Kendall said the prolonged budget uncertainty due to sequestration continues to cause “fundamental problems.”

“Sequestration is not being repealed,” Kendall said. “We’re modifying that a little bit for [fiscal years 2014 and 2015], but after that, the law remains at the sequester levels.”

Sequestration levels, he said, are not the funding levels the Defense Department needs.

“The [fiscal 2015] level, if it persists or prevails, is well below what we need to defend the country,” Kendall said. “Even this year, of course, we’re below what we’d like to have -- what we thought we needed under the strategy we put out about two years ago now. The uncertainty is causing some pretty fundamental problems for us.”

Until the Pentagon has some idea of the budget’s trajectory and where it will end, he said, it’s difficult to do serious planning. “The driving factor in our planning is the size of our force structure,” he explained. “Everything flows from that. So we don’t know where we’re going to be able to end up in terms of force structure that we can support.”

Kendall said the department will end up keeping force structure in the hopes that it can be retained, but he added that this isn’t the right course for the department’s health. “If we know where we’re going to end up,” he said, “we can decide to get to that level of force structure that we can support longer-term right away.”

But given the uncertainty, he added, the tendency is to hang onto force structure.

“What I think you will probably see us doing is taking steps to start to bring it down,” he told the conference audience. “It’s the only prudent thing for us to do.”

The acquisitions chief was cautious about getting ahead of the president and Defense Secretary Chuck Hagel in terms of speculating where the budget will go, but he emphasized the impact of hanging onto force structure. “If we hang onto more force structure than we can afford,” he said, “it means that the other accounts, besides pay and joint operations, have to pay the bills.”

All of these effects, Kendall warned, could lead to a hollow force and a readiness crisis.

“I lived the readiness crisis of the ’70s,” he said. “I know exactly what it’s like to have a hollow force because of readiness. But that’s not the only way we can have a hollow force.”

Failing to invest in science and technology to stay ahead in the world is another route to a hollow force, Kendall said, as is relying on aging equipment that’s hard to maintain.

“So there’s a number of ways you can have a hollow force,” he said. “Readiness is just one of them.”

Kendall said Pentagon officials are trying to avoid that.

“But frankly,” he added, if we stay on the path that we’re on, I think that we will, at least in the short term, until we can get back into balance, have a hollow force because of this.”